July 30, 2012 - 20:06 by bankruptcylawyer

Bankruptcy is not something that anyone longs to go through or even plans to take part in. In most cases it is unexpected and thought of as a last resort. Nevertheless, filing bankruptcy can sometimes be exactly what is needed to get a fresh financial start. Since the recession began several years ago in the United States the number of bankruptcies filed increased by the thousands, and many bankruptcy lawyers began hearing similar reasons of why people were filing. Below is a list (in no particular order) of the top 5 causes of bankruptcy today:

Unexpected expenses: We have all experienced a situation where suddenly a large amount of money is needed because of some mishap that couldn’t have been avoided. Whether it be a new roof, new tires for your vehicle or natural disasters like floods, fires, and hurricanes; without the proper insurance those disasters can rapidly change your financial situation.

Divorce: Similar to bankruptcy, divorce is something that no one plans, but it happens nonetheless. Depending on the outcome written in the divorce decree some spouses are left with more debt than others, which makes the decision to file bankruptcy necessary. The bankruptcy code is clear that what is written in a divorce decree will essentially “trump” typical bankruptcy rules so it is very important to discuss the decree with your bankruptcy lawyer.

Abuse of Credit: Using a credit card is so simple, yet in some cases so destructive. Just a few swipes of the card and you can find yourself with several maxed out credit cards and minimum payments that you barely afford. Chapter 7 bankruptcy rules allow for unsecured credit card debt to be wiped away or “discharged.” Credit Card debt is the main type of debt involved in Chapter 7 bankruptcy because it is so commonly abused and quickly overwhelming.

Job Loss: The economy has been treacherous for the past several years and layoffs are far too prevalent. Men and women that have held the same job for decades are suddenly unemployed and wondering where to go next. Although sometimes layoffs provide time to prepare yourself mentally and emotionally, they do not always provide adequate time to prepare yourself financially. Without a steady income typical monthly bills become late and debt continues to grow, making bankruptcy a viable option.

Medical Expenses: Our health is not something to be neglected, and when broken bones, trips in the ambulance, or doctors visits happen they cost quite a bit of money. Unfortunately sudden medical expenses can costs thousands of dollars and can take even the most frugal person into financial peril. Chapter 13 bankruptcy rules allow medical debt to be consolidated and paid off over the course of 3-5 years and Chapter 7 bankruptcy rules allow unsecured medical debt to be completely eliminated.

The causes of bankruptcy range well beyond this list, but the key is to remember that filing bankruptcy can be a wonderful option to take advantage of if some sudden debt has come up.

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